Terms Flashcards

Question

Olley v Marlborough Court Principle

Answer 1

Notice must be given before or at time of contracting

Answer 2

– C went to get tickets for Deck Chairs – Tickets said they don’t accept liability – Deck chair broke, injured C – Held: o Clause was ineffective o Receipt was not appropriate place for contractual terms o Terms must be placed where someone expects it

Answer 3

Is the document one that would reasonably contain terms and conditions Terms must be placed where someone expects it

Answer 4

Issue with previous dealings

Answer 5

``` o Contract for the sale of Hops o Buyer asked if there was sulfur in it o Buyer said if yes, he didn’t want it o Was assured that there was none o There was sulfur in the hops o Important term of the contract? Or warranty? o Held: • It was a term • Important • It was a condition of the contract • Contract could be terminated ```

Answer 6

Heilbut, Symons & Co v Buckleton [1913] Test Importance of a term/statement

Answer 7

• W traded in a car • W believed it was the 1948 model • It was really the 1939 model, worth less • Someone changed the log book to make it appear this way • Innocent mistake • Was it a term or representation? • If term, would give the dealer damages • Held: o Not a mistake because of lapse of time o Term? o It was a warranty (a promise of the contract) o Because seller was not knowledgeable about the car it was an innocent misrepresentation o Could not rescind contract because of lapse of time • Dissenting: o Should receive damages o Should of used Misrepresentation Act 1967

Answer 8

Heilbut, Symons & Co v Buckleton [1913] Test Contractual Term or Representation Special Knowledge

Answer 9

``` • D was the buyer, H was car dealer • H said car has done 20,000 miles, replaced engine and gear box • This was untrue • Who was the position to know the truth about the situation? • Objective test • Intention of the parties is important • Held: o For the Buyer o Dealer should have known better ```

Answer 10

Heilbut, Symons & Co v Buckleton [1913] Test contractual term or representation Special Knowledge

Answer 11

• M said motorcycle he was selling was a 1942 model • Contract just said motorcycle, no year • Is the oral statement a term of the contract? • Held: o Just a representation o Not a contractual statement o If they intended it to be, they would have written it down

Answer 12

Heilbut, Symons & Co v Buckleton [1913] Test Was it written down If they intended it to be a term, they would have written it down

Answer 13

–Case: o Involved the sale of rabbits o 1000 actually meant 1200 according to custom o Judge said it was good

Answer 14

Exception to the parole evidence rule Can bring in extrinsic evidence to prove custom

Answer 15

o M was a tenant for 6 years o He slept at the shop upstairs o When lease was renewed, landlord wanted to make it only a business o M asked if he could still sleep there, Landlord said yes o Could evidence of this conversation be admitted to prove the other agreement? o Held: • Yes • Could be admitted to prove external contract • It was a separate agreement • Collateral contract

Answer 16

Exception to the Parole evidence rule Extrinsic evidence can be admitted to prove there is a collateral contract - 2 contracts rather than 1

Answer 17

``` – Purchase of a cigarette vending machine – Form had a sweeping liability clause – Machine did not work – Form was printed in small print – Lord Denning was G’s council – Held: o She signed the document o No misrepresentation o Contract is enforced o Rule: • You sign it, you are bound by it ```

Answer 18

You sign the document, you are bound by it

Answer 19

– P got her clothes dry cleaned – D had a receipt that said they take no liability – Told P that is was only beating, it was actually much wider – Dress had stain – D said clause covers it – P sued D for damages – Argued they mislead her about the clause – Held: o P to receive damages o Misrepresentation

Answer 20

Can avoid the rule in L'Estrange If signature is obtained by misrepresentation

Answer 21

``` – Got a ticket, checked his bag – Lost bag – Exclusion clause on ticket – Does it apply? – Held: o If he knew that there were terms and condition, but did not read them, he would be bound o Would a reasonable person expect to see the writing on the back of the ticket? o Objective test o Must bring notice to other party ```

Answer 22

Reasonable steps must have been taken to bring terms to attention of other party

Answer 23

– Reasonable steps taken to bring notice of the clause to the other party – S was a customer – Terms and condition – One condition was very strict about late fees – S owed over £3,000 in late fees – Held: o Clause was so onerous that it was not part of the contract o I did not do enough to draw attention to this cause o “Red Ink with a Red Hand” o New Rule • If particularly onerous clause, must draw even more attention to it

Answer 24

Unfair Terms Reasonable steps must have been taken to bring terms to attention of other party Lord Denning "Red Ink with a Red Hand” New Rule • If particularly onerous clause, must draw even more attention to it

Answer 25

``` – Terms and condition were posted outside the ferry office – Also in a risk note – Risk note was signed sometimes, but not always – Were the risk note terms incorporated? – Held: o No o There must be regularity o Was not signed always ```

Answer 26

Incorporation by course of dealing There must be regularity

Answer 27

– I called B, needed a crane – No discussion of the terms and conditions – B later sent a copy of terms and conditions – Before I received it, the crane sunk in marshy grounds – Clause in condition said I incurred expenses for damages – Held: o Terms are incorporated in contract o Both parties were in the same business o Standard condition in the trade o I should be aware of condition

Answer 28

Incorporation by course of dealing * Same trade and industry * Not incorporated by course of dealing but both parties knew quite well substance of the conditions; common in the trade

Answer 29

– Condition of agreement that the business must visit the customers every week – S wanted to terminate the agreement – They argued that they did not make all the visits every week – Held: o Initially called a condition o Unreasonable to terminate entire contract for missing 1 visit – Dissent (Lord Wilberforce) o It is a condition o Freedom of contract

Answer 30

Initially called a condition oUnreasonable to terminate entire contract for missing 1 visit Not a condition Dissent (Lord Wilberforce) o It is a condition o Freedom of contract

Answer 31

o Innominate terms was created in this case o H was hired o Ship was supposed to be sea worthy o Sailed from US to Japan o Ship was really old o Hire was for 2 years o Ship did not work for 20 weeks o Enough to justify termination of contract? o Held: • If whole benefit of the contract is denied, termination is possible • 20 weeks in 2 years is not enough to terminate

Answer 32

o Innominate terms was created in this case • If whole benefit of the contract is denied, termination is possible

Answer 33

``` o Sale of a patent o Written agreement was created o Oral agreement that patent wouldn’t be effective until 3rd party approval o Held: • Non promissory condition • Condition to the contract taking place ```

Answer 34

Non Promissory Condition • Condition to the contract taking place Exception to the parole evidence rule To show that the contract does not operate anymore

Answer 35

– Promises that are part of the contract o Condition where performance of the contract is dependent o Condition that have to have happened before the contract can be created – Pym v. Campbell (1856)

Answer 36

``` o B was an opera singer o G wanted to B to sing at concerts o B got sick o Showed up 3 days late to rehearsals o Gave no notice o G terminated the contract o B sued o Held: • Warranty, not a condition • Cannot terminate the contract ```

Answer 37

* Warranty, not a condition | * Cannot terminate the contract

Answer 38

``` – P was tenant of farm, D was landlord – P gave notice to quit – He had to work the land up until his tenancy – When it ended, P was entitled to a fair allowance for his seeds and labor – Held: o Yes, he is o Up until the end of the tenancy o It was term implied by custom ```

Answer 39

Term can be implied by custom

Answer 40

– M was a steam ship – Did not pay to moor his ship, but did pay for the use of cranes – Ship got damages from tide – Owners of the ship sued the wharf owner for damage – Held: o Nothing in the contract that talks about protection of the ship o Can imply a term here (Business efficacy test) o Implied term of reasonable care

Answer 41

oTest is necessity: • Expressed as officious bystander OR business efficacy test – Must be so obvious that everyone knows it

Answer 42

– New test – Appeal about an article by B – If have golden share, can appoint directors – Did not say what would happen if no longer had enough shares? – Argument that it is implied that can retain spot of board as long as you have enough terms – Held: o Must be implied that when no longer have enough shares. Position no longer exists o Must be reasonable and equitable o Business efficacy o Capable of clear expression o Lord Hoffman created test

Answer 43

Must be reasonable and equitable o Business efficacy o Capable of clear expression o Lord Hoffman created test

Answer 44

o Dispute between owners of the ship o Hired the ship o Supposed to leave on a voyage o Ship was damaged o Owners said it was the fault of those who hired the ship o Implied term that they must have a safe berth o Held: • Not implied • Not necessary for the contract to work to have a safe berth • Should have included the term

Answer 45

– Accepted Lord Hoffman’s test (AG of Belize and others v Belize Telecom) – Re-emphasized necessity – Reasonableness is not enough, must be necessary

Answer 46

Reasonableness vs Necessity

Answer 47

``` – HoL blurs terms implied in fact & law – L had a number of council flats – 70 flats – in contract, lots of conditions – No condition imposed on the council – Case was about the communal areas of the flats – Rubbish got in bad shape – Tenants stopped paying rent – Argued that it was implied term for council to keep communal area clean – Held: o Not necessary for the contract to work o It is reasonable to imply this term o The council did actually keep the area in good shape o Does it need to be necessary? o Made necessity test less stringent ```

Answer 48

Terms implied by law Test is still necessity but perhaps less stringent says McKendrick: somewhere between necessity and reasonableness?

Answer 49

o Pension contributions o Cheaper to buy into extra years (lasted 12 years) o Argued that there was an implied term to inform of pension rights under contract o Held: • Necessity existed • Requirements: • 1) These terms are not individually negotiated • 2) Employees have to take some action to get the benefit • 3) Employee canot be reasonably be expected to know that the term exist unless told otherwise • If all met, Term can be implied in law

Answer 50

Terms implied by law

Answer 51

– C was the senior director – Contract said if he was ill, he gets 6 months full pay – After, at the company’s discretion – Entitled to benefit if he was not able to work – He was terminated – Contract said that once he was terminated, payments were not automatic – He suffered a nervous brake down before being terminated, applied for early retirement – After employment ended, he lost his benefits (at their discretion) – C argued that there was an implied term that the company had to take reasonable care of his economic well being – Held: o No implied term o No general obligation to take reasonable care of the economic well being of their employee o Appealed, still rejected

Answer 52

Terms implied by law court may take account of considerations of reasonableness

Answer 53

– Sale of a car – Brand new range rover (they had problems in the 80s) – Car had problems – Didn’t make the car unroadworthy – Was there a breach of s.14 Sales of Goods Act (quality) – Held: o Yes

Answer 54

– Was there a breach of s.14 Sales of Goods Act (quality) Implied term by statute

Answer 55

``` – R sold fishing boat to S – Boat was unsatisfactory – Argued that it violate s.14 – S. 14 only applies to business – S is a fisherman, is that a business? – Held: o R’s business was fishing generally, should know better o Violated s.14 ```

Answer 56

Implied term by law Statute only applies to businesses

Answer 57

o Bunch of investors o They were compensated for their loses o Agreement was signed by the investors o ICS could sue on their behalf, with one exception o Principles to how this one exception was to be interpreted o 5 principles (listed below) o Note was drafted for normal people to read

Answer 58

Lord Hoffmann’s five principles for interpreting contracts ``` oLord Hoffmann’s Principles • 1) Interpretation • 2)Matrix of Facts • 3) Exclusions • 4) Meaning of Words • 5) Linguistic Mistake ```

Answer 59

o Settlement agreement o Term said it ended all the claims o Hoffman: the words of the exclusion were very wide. The extra payment was a big deal (millions of £). He still agrees with it after looking at the principle.

Answer 60

Interpretation of Contract terms

Answer 61

HOL reaffirms objective approach to construing contracts o Clarified when they would look at background information o Look at what the parties would have done Construe contract “in accordance with what a reasonable person would have understood the parties to have meant, taking into account relevant background” factual matrix

Answer 62

• B phones HS agent • B says” I understand you are bringing out a rubber company” • HS replies “We are” • B asked for a prospectus, but there were none available • B asked “ if it was alright” • HS said “We are bringing it out” • On the faith od this, B purchased shares • Shares turned out to have little value • Company was not accurately described as a ‘rubber company’ • B claimed damages for breach of contract • Held: o No breach of contract o Merely a representation, no warranty o No intention that there should be contractual liability regarding the statements o 4 Factors in interpreting whether statements are terms or representations:

Answer 63

o 4 Factors in interpreting whether statements are terms or representations: * 1) Timing * Time elapsed between making the statement and the final manifestation of the agreement * 2) Importance * Importance of the statement in the mind of the parties * 3) Whether the term is reduced to writing or not * If written down, more likely to be a term * 4) Special Knowledge * The maker of the statement is in a better position to determine the accuracy of the statement or have the responsibility of doing so

Answer 64

• E found a site on a busy main street to erect a petrol filling station • E estimated that the station would reach 20,000 gallons in the third year of operation • Planning authority refused permission to have the pump on the street • Pumps were placed behind the building • M applied for tenancy of the station • E gave him the 20,000 gallon estimate, failing to take into consideration that the pumps were in the back • M took the 3yr lease in reliance of the statement • Despite M’s efforts, he could only sell 60,000 – 70,000 gallons • E started an action for possession of the station and money due for the petrol • M counterclaimed damages for breach of collateral warranty • Held: o There was a collateral contract o That M would be able to sell 20,000 with reasonable care and skill o E is liable for damages for breach of contract

Answer 65

* M counterclaimed damages for breach of collateral warranty * Held: oThere was a collateral contract oThat M would be able to sell 20,000 with reasonable care and skill oE is liable for damages for breach of contract

Answer 66

• HL purchased painting from C for £6,000 • Painting was described in an auction catalogue as being by German impressionist artist Gabrielle Munter • Both buyer and seller were London art dealers • C were not experts on German paintings • HL specialised in German paintings • HL sent experts to inspect the painting before the purchase • After the sale, HL discovered that it was a fake and worth less than £100 • HL brought an action under s.13 Sale of Goods Act • Held: o By sending experts, the sale was no longer by description o S. 13 only applies to goods sold by description o The buyers had not protection

Answer 67

Statutory Implied Terms o By sending experts, the sale was no longer by description o S. 13 only applies to goods sold by description o The buyers had not protection

Answer 68

• Seller of cow said it was healthy • Cow died within 3 months of the sale because of sickness • Was the statement a term of the contract? • Held: o Yes o Seller had special knowledge o If given verbal assurance of condition, it is a condition • Not always the case if it is a warranty

Answer 69

Special Knowledge o If given verbal assurance of condition, it is a condition

Answer 70

• E was 17 • Became a paraplegic after he dived into the shallow end of the swimming pool while on vacation • Pool was attached to apartments owned by K • There were two small ‘no diving’ signs • The pool was never closed • E did not know which end was the shallow end • E reasonably thought the pool was available • E argued that there was a breach of implied terms to the contract that the pool would follow proper guidleines • Held: o No breach o Individuals are responsible for their own actions when there are good reasons why he should not

Answer 71

o Individuals are responsible for their own actions when there are good reasons why he should not